Three ways social media can save you money

JenniferOpenshaw

NEW YORK (MarketWatch) -- Now more than ever, people are eager to hang on to every dollar they can, and social-media sites can help you do just that.

My parents, who like many Americans have faced thousands of dollars in medical costs, can now turn to places like PatientsLikeMe.com to save 10% or more on their out-of-pocket expenses.

"In the past, it was much more difficult to share information on your medical costs, but with the ubiquitous social exchange, you can," said David Williams, chief marketing officer of PatientsLikeMe.

Rob Garcia, senior product director of the peer-to-peer lending exchange Lending Club said: "Social media also provides an outlet for real-time feedback and discussions with other like-minded consumers. Suddenly, you can now harness the power of your social networks and the general population to save, invest, borrow, and manage your budget."

And, finally, these sites often cut out the middle man and bringing efficiency to consumers. At the recent South by Southwest conference, where I moderated the Banking 2.0 panel, many people asked if banks were still needed. They are, yes, for their deep pockets, but these new, nimble players are leveraging those banks' strengths and weaknesses to bring you more direct financial services.

Here are just three ways innovation and social media are helping Americans boost their pocketbooks:

1. Saving on medical bills

Do you find yourself spending hours trying to manage your medical costs or get an answer from some phone agent? At PatientsLikeMe, patients with certain diseases can share how much they're paying out-of-pocket for medications and under which plans. Whether you have multiple sclerosis or fibromyalgia (common among women), you can connect with people in your area to find out how and where they got lower-priced medical care.

"It used to be you could only talk to your co-worker in your job; that's changed," said Williams.

2. Boosting investments, savings

With 28% more Americans saying they are using online banking more than a year ago and new budgeting communities growing like weeds, it's clear we're looking for faster, better answers to our money problems.

Young companies like LendingClub.com are cutting out the middle man -- banks -- to offer consumers the opportunity to lend money directly to others and obtain a higher return. "People who aren't happy with a 2% rate on their CDs can get a much higher rate at Lending Club," Garcia said.

This "peer-to-peer" lending platform allows regular people looking to borrow money -- whether to pay off debt, build a business or buy a home -- to get funding from other Americans. You, the investor, can choose the risk profile of the borrower you want to invest in -- a new experience for most -- and even build an entire portfolio of these investments. One featured woman, Sara, borrowed $15,000 through more than 100 investors after her bank increased the rate on her daughter's credit card.

While the Lending Club platform is still new, it already boasts low default rates of just over 2%.

Meanwhile, if you're looking to reach a savings goal, such as kitchen remodel or a vacation, SmartyPig.com lets you get a little help from your friends and family. You set up the goal and then leverage the power of Facebook and Twitter to get financial support for those goals.

Another way to tap social media: Use sites like Twitter to stay on top of the latest tips and tricks for saving money and improving your overall financial picture. You can follow your favorite financial experts. Twitter is a constant news source for financial adviser Jim Ludwick, who follows some 600 people to stay in the loop.

3. Boosting your credit

I remember asking years ago, when I worked for a bank, why we don't count things like paying your utility bill or rent on time toward your credit score. After all, so many young people may not have a mortgage, but they do have an apartment. Now, your ability to build a credit history is changing -- fast.

CreditKarma.com uses Twitter and other social-media networks to encourage people to share their credit-score experiences. "If you don't talk about it, you don't learn about it, and you don't become a better consumer," said Ken Lin, the company's chief executive.

For those with no credit, like the graduating college student, CreditKarma is teaching traditionally hard-to-reach people how to begin the process of building credit. They then offer tools that show them -- based on real data -- how they can save dollars on big-ticket items. "It may be lowering your auto loan rate by 5 points and saving $150 a month," Lin said. (Note: Consumers should be careful about refinancing too often.)

Like many other money-management sites, including Mint.com, CreditKarma receives a portion of the revenue a company generates through a transaction, but the company says it offers up the best choices and lets the customer decide. CreditKarma and LendingClub may entirely change the way credit is built. After all, if the power of social media continues to grow, these companies could continue to harness information without the dollars spent by old-fashioned financial institutions. And that might end up bringing you even more savings.

Jennifer Openshaw, founder of the original Women's Financial Network, is author of "The Millionaire Zone." Through SuperFutures.org, she offers a youth leadership program at the United Nations. You can find her on Facebook, Twitter @jopenshaw or email at jennifer@familyfn.com.

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